"Once the European nations realise we are not going to budge on control of our borders, they will want to talk, in their own interest.

"There may be some complexities about rules of origin and narrowly-based regulatory compliance for exports into the EU, but that is all manageable."

He adds: "We should work out what we do in the improbable event of the EU taking a dog in the manger attitude to Single Market tariff free access, and insist on WTO rules and levies, including 10 per cent levies on car exports.

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01:53

"Let us be clear: I do not believe for a moment that that will happen, but let us humour the pre-referendum Treasury fantasy.

"WTO rules would not allow us to explicitly offset the levies charged, but we could do a great deal to support the industry if we wanted to."